Tips for Small Business Success
Why do some businesses flourish while others never gain momentum before they have to close the doors? The odds for small business success are discouraging. Twenty percent of businesses fail in the first year and 50% of new businesses fail within five years.
Many entrepreneurs are experts at what they do in their business. Some are even considered visionaries. Numerous businesses have started with the perfect idea only to fail within a year or two. We all know a local businesses that started with a good idea, or filled a need within our community, only to see that business close soon after opening.
Why Do So Many Businesses Fail?
It isn’t enough to have the perfect idea or the right expertise. Hard work alone won’t guarantee business success.
After starting a business, the big challenge is keeping the business on the right path to grow and succeed. You’ve dreamed about success and know the basic concepts of increasing revenues, cutting costs, and marketing. Sounds simple. Sure, you understand these concepts but do you understand how to make them work for you?
The human body has many systems that work together to keep us healthy. Your business must operate in the same way. You must have a holistic approach to managing and running your business so it will grow into everything you imagine it could be.
Vision
Most start-up businesses are aware of the need for a business plan. It is one of the essential elements required for obtaining financing at the beginning stages. It’s even more important to keep a rolling forecast, one that is frequently updated to monitor your progress and make adjustments for how you will get where you want to go. How can you arrive at your destination if you don’t know how to get there?
Your budget will also guide the necessary daily steps to help you on your journey to success. Smart entrepreneurs look ahead daily, make to-do lists so tasks are completed timely and efficiently. At the same time you are keeping track of your daily tasks you should be looking ahead to the weekly and monthly items that will determine where you expect to end your year and beyond. If you can clearly see where you want to end up long-term, it’s easier to map out how to get there.
Critical Thinking
Now that you have your vision and the tasks to get there, what do you do with that information? Sometimes it’s easy to get the information you need, but it isn’t always easy to know how to use the numbers properly. The vital numbers to analyze where you are on your business journey are your revenues, costs and cash.
Revenue Analysis
Your revenues should be growing at a steady pace and that pace will differ among industries. What is the typical revenue growth for your specific industry? Have your sales increased over the past few months and how do they compare to last year at this time? What is the average growth for your industry during that same time frame? Measure your revenues compared to your competition. Research how other companies in your industry are growing their revenues and see how you can apply similar ideas.
Cost Analysis
Your business costs should be reviewed constantly to find areas to save money. Look for any opportunities to eliminate unnecessary spending, buy in bulk when it makes sense, or pay invoices early if a discount is offered. Business owners often assume they don’t have any control over where their money is spent, but that isn’t always the case. Always be on the lookout for vendors that can provide better pricing for the supplies you need without sacrificing the quality of your product or service.
Cash Analysis
Cash is an area often not considered important until it’s too late, but without a steady inflow of cash no business can survive. If you are a retail business, most likely your cash inflows happen at the time of the sale, but if you are a business that provides a service you are largely dependent on customers paying your fees over the course of weeks or months. Be clear with customers about expected payment terms and maintain a close watch on money you’re owed. If needed, ask customers for a deposit up front. Sometimes it is more beneficial to offer a discount if a customer pays early.
Heart
Entrepreneurs are known for having vision and foresight, but the ones who really stand out are the ones with the heart to do whatever is necessary to make their dream a reality. You knew it would take commitment, hard work and long hours to make your small business a success. Often it’s more difficult to stay focused and have the confidence you are doing the right things to drive that business success.
Too many small business owners become discouraged when things out of their control happen to hinder their progress or growth. It’s important to stay focused on the end game and have the flexibility to adapt when necessary.
Be open to innovation and new ideas to keep your business going. The important thing is to achieve the success you worked so hard for and know that it will probably happen differently than what you originally had planned.
Connected Operating Systems
It doesn’t matter how much vision, analytical skill or heart you have if you don’t have the operational support all successful businesses require. All successful businesses, regardless of size, have developed systems to keep their businesses running smoothly and efficiently. The systems don’t always have to be automated, but they do have to run smoothly and provide information quickly.
The purpose of these systems is to manage the day to day operations as easily as possible. As a business owner you need time to be a strategic planner and thinker. The quicker you have the information from the systems you have in place, the more likely your decisions can be made timely.
Embrace technology wherever possible and use it to your advantage. We are fortunate to live in a world where information can be updated real-time, making it easier than ever to stay on top of the key areas of your business.
Focus on the Big Picture
Increase the chances of your small business success and incorporate the advice above in your daily routine. Look to hire employees or outside consultants to help in the areas you need additional support most.